Title IV funds including Direct Loans (DL) are awarded to students under the assumption that they will attend university for the entire period for which the aid is awarded. When an AUB student withdraws from the university, for any reason including medical withdrawals, he/she may no longer be eligible for the full amount of Direct Loans funds that he/she was originally scheduled to receive.
When DL funds are fully returned?
DL funds are fully returned or refunded by AUB to DOE in the following cases:
- If a student does not register for a semester within a year aid period
- If the ISA Unit knew that a student would not begin attendance prior to disbursing Direct Loan funds directly to the student for that semester (e.g., the student notified the ISA Unit that he or she would not attend, or the student was expelled)
- If the student is not any more eligible for the funds for any reason such as enrolling for less than half-time, placed on second consecutive probation or placed on academic probation for a total of three regular semesters.
- If by the end of the last payment period the ISA Unit becomes aware that the student did not complete the registration process for a semester then he/she is considered not enrolled for that semester.
In such cases, AUB must return all DL funds that were credited to the student’s account for that semester and the student must return the amount of payments that he/she received for that semester up to the total amount of the loan funds disbursed.
When does R2T4 apply such that DL funds are partially returned?
The ISA Unit has to partially refund DLs whenever a student receives (or is entitled to receive) DL funds for a semester but doesn't complete the entire semester. The student is then considered withdrawn. The ISA Unit does not make the return of Title IV funds calculation if a student withdraws from some, but not all, classes in the semester.
The eligibility for DL of a withdrawn student will be re-evaluated by a calculation to determine how much of the award the student has earned. The amount of DL funds to be returned depends on the amount of DL funds a student "earned”. Any disbursed "unearned" portion must be returned. The institutional refund policy for tuition, fees and other charges will determine how much students owe to the school when they withdraw. Students may have unpaid charges at the school after unearned Title IV aid is returned.
DL funds are used to pay instructional charges first, and the ISA Unit is responsible for returning the unearned portion of those funds when a student withdraws. Whether or not DL funds are really used to pay institutional charges (for example, credited to the student's account) does not affect the LU’s responsibility for returning all or a portion of unearned DL funds. However, both the school and the student share responsibility for returning DL funds. AUB returns the lesser of all "unearned" DL funds. The student returns all remaining unearned DL funds according to the repayment terms stated in the promissory note.
DL funds must be returned in a specific order: First to Unsubsidized DL Loan, Then to Subsidized DL Loan, Then PLUS Loan.
Calculation of R2T4
The calculation in R2T4 will determine the amount of funds earned by the student and therefore the amount of unearned funds that should be returned to the DOE. The calculation will also determine how much unearned funds must be repaid by AUB and the student. The return of Title IV funds calculation also helps the ISA Unit determine whether a student has actually received all earned DL funds. If not, the student may be eligible to receive an additional post-withdrawal disbursement up to the earned amount of assistance.
The calculation of R2T4 is made as per federal aid regulations using the sheet attached as Appendix C.
The determination of the amount to be returned depends initially on the percentage of period of enrollment completed by the student. The latter is determined by dividing the calendar days completed in the period by the total calendar days in the period (excluding scheduled breaks of five days or more). If this percentage is greater than 60%, funds are not returned.
AUB must return the amount of Title IV funds that it is responsible for as soon as possible, but no later than 45 days after the date that the ISA Unit determines that the student withdrew. The date of the ISA Unit’s determination that the student withdrew is one of the following:
- For a student who provides notification to AUB of his/her withdrawal, the student's withdrawal date as determined or the date of notification of withdrawal, whichever is later.
- For a student who did not provide notification of his/her withdrawal to the institution, the date that the institution becomes aware that the student left AUB.
- For a student whose withdrawal is negated, the date the institution becomes aware that the student did not, or will not complete the semester.